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The editorial with the above title in the Guardian of Wednesday, January 11, 2007 refers. The plight of depositors caught in the quagmire of banking distress and failure should, no doubt be of utmost concern to a newspaper whose philosophy is conscience nurtured by truth. This in itself is the hallmark of responsible journalism driven by the desire to foster overall public good.
However, the concern should go beyond merely drawing attention to the plight of these hapless citizens denied access to their hard-earned money through no fault of theirs to a thorough and factual analysis of the true situation on the ground devoid of subjective conclusions. It should as deliberate policy guarantee fairness by extending the same searchlight to the distress resolution framework and strategies put in place by the authorities in order to ensure balance. The editorial in question failed to observe this simple maxim and in the process ended up drawing erroneous conclusions which cast aspersion on the integrity of the Central Bank of Nigeria, CBN.
What are the facts? The Banking sector Consolidation exercise came to a close on December 31, 2005 at the end of which 14 deposit money banks with negative shareholders’ fund that could not find merger partners had their licenses revoked by the CBN. The Governor of the Bank, Professor Chukwuma Soludo had then promised that unlike in the past where depositors were left in the lurch during the banking distress era of the 80s, private depositors of the 14 banks that were unable to meet the consolidation deadline should be rest assured of receiving their deposits in full.
The Governor did not promise that depositors of the insolvent banks would be paid on 31st December, 2005. Indeed, that was deadline for the banks to meet the capital/consolidation requirements. In addition, the revocation of the licences of the banks that were insolvent and failed to meet the set criteria did not take place until January 16, 2006. It was on that day that the Governor announced the policy that all private depositors would be paid all their deposits and not just the =N=50,000.00 under the insurance scheme, within the shortest possible time.
He specifically made it clear that the CBN was interested in protecting the hard -earned money of private depositors and that the Bank would do everything possible to ensure that the deposit resolution is effected within the shortest time possible. When asked by a reporter to give a time limit the Governor replied that given the processes involved, the minimum time before payment would commence should not be less than 90 days. It is perhaps this that has been misinterpreted to mean a three-month deadline in which all depositors would be paid. Even a severe interpretation would put that to April 15, 2006 and not December 31, 2005 as the Guardian Newspaper would want the world to believe.
Secondly, the number of banks involved is 14 and not 34 as the Guardian editorial purported. As at December 31, 2005 there were 89 mostly fragile and small banks operating in the country. On January 2, 2006, the CBN announced the emergence of 25 banks comprising 75 banks that independently or through mergers had met the set criteria. That left the 14 insolvent banks and not 34. The Guardian ought to know.
However, some of the promoters of the failed 14 banks out of selfish considerations instituted legal actions to challenge the revocation of their banking licenses. The legal obstacles prompted some delay in the failure- resolution of three out of the 14 banks. Although this was anticipated, it is on record that through the failure resolution option of Purchase and Assumption (P&A), the verified deposits of private depositors of the former Allstate Trust Bank Plc were by May, 2006 fully transferred to Ecobank Plc. This is particularly significant when viewed from the percentage of depositors that were involved as a proportion of the total population of the failed 14 banks. The transferred Allstates private depositors represent almost 50 per cent of the total for all the 14 banks.
Suffice to note that private depositors of the former Lead and Assurance banks had also been fully transferred to Afribank Plc while those of Trade Bank are being assumed by UBA Plc. In all cases, the private depositors involved now have unhindered access to their deposits and on top of it continuity of banking services.
All efforts are being made to speed up the process to bring succor to the depositors of the remaining four banks- City Express, African Express, Metropolitan and Hallmark.
We once again implore media practitioners to always take the pains to cross-check their facts. On our part, we will continuously strive to ensure that the two-way information flow is not impaired.
Head, Corporate Affairs
Central Bank of Nigeria
Abuja.
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